Shipping Company Jacks Up Deposit, Slashes Grace Period to Offset Container Scarcity

The Ethiopian Shipping & Logistics Services Enterprise (ESLSE) has beefed up container guarantee deposits by as much as 66pc and cut container returning periods for importers by five days, shortening the grace period by three days. Its executives blame importers' reluctance to offload cargo and return leased containers in time.

The guarantee deposit for 20ft containers has jumped by 50pc to 15,000 Br while importers will have to deposit 25,000 Br for 40ft, an increase of two-thirds.

The Enterprise's executives refrained from confirming the updated requirements, but cited that changes are forthcoming.

Importers and freight forwarders have long been complaining about lengthy customs procedures. Although they would prefer not to hold on to the containers for long, they argue it is challenging to complete the process within the timeline. Importers are charged 400 Br for 20ft containers and over 900 Br for 40ft containers that stay at dry ports for up to a month after arrival. They cede the amount to the Enterprise if the containers remain at dry ports for up to three months and are compelled to make additional deposits for more extended periods. They also need more days to settle customs requirements and unload merchandise before returning containers to dry port facilities.

The Enterprise is subjected to fees in demurrage from companies it leases containers from. Importers' reluctance to offload cargo quickly and return containers in time forced the Enterprise to tighten the rules, says Wondwossen Kasa,  acting deputy CEO for the shipping service sector.

“We'd prefer importers to unload their cargo at dry ports and return the containers to us on the spot,” Wondwossen told Fortune.

A global logistics disruption beginning two years ago has led to a shortage of containers that shot up prices. As lockdowns and restrictions began to take hold worldwide in the wake of COVID-19, factories in China, which accounts for over 90pc of the market share, were shut down. Surged demand in e-commerce and online shopping led to a massive backlog, causing an overcrowded shipping industry when the factories resumed production as the effects of the pandemic subsided.

The scarcity provoked outcries from importers, who reported their goods were stranded, particularly in Chinese ports, due to shortages of containers.